“I’ve always been puzzled by it,” Brown told reporter Jeff Stein. “All the assessors were opposed to it. It should never have been signed.” Significantly, no other industry in California received such relief for its inventory.
MCA also further diversified, buying Spencer Gifts, a mail-order house based in Atlantic City, New Jersey—specializing in gifts, housewares, stationery, home decor items, notions, and novelties—which would later become a fixture in shopping malls around the country and a multi-million-dollar enterprise.
In 1966, MCA had grossed nearly $225 million from its movies, television productions, records, real estate investments, and other holdings. But, on account of a number of box-office disappointments—like Thoroughly Modern Millie in 1967, and Counterpoint, The Loves of Isadora, and Secret Ceremony in 1968—MCA found itself facing an $80 million debt, the biggest in the corporation’s history.
“So Stein, Wasserman, and Schreiber made a number of moves to deal with the situation,” one report stated. “Wasserman set up a three-person executive vice-presidents’ group that included studio-tour head Al Dorskind, TV syndication operative Berle Adams, and former Lehman Brothers executive Dan Ritchie, who was put in charge of financial affairs.”2
Then the Pittsburgh-based Westinghouse Electric Corporation—which in 1967 had $3 billion in sales of everything from light bulbs to nuclear reactors—got into the act. Already the owner of five television and seven radio stations, Westinghouse wanted to add MCA to its huge complex. The $365 million deal offered by Westinghouse stood to make Jules Stein a whopping $102 million and make him Westinghouse’s largest stockholder. Wasserman stood to make a cool $50 million. Westinghouse also promised to continue the expansion of Universal City.
“Stein and Wasserman were in favor of the whole thing and wanted it to happen,” said a former top MCA official. “Stein wanted out of the business to pursue his interests in eye research. He had just pulled all kinds of strings and raised and personally contributed a lot of money to get the Jules Stein Eye Institute built right on UCLA’s campus. For Stein, that was everything. That was his red-marble monument. Wasserman wanted to remain autonomous in movie and television production—which the Westinghouse deal also guaranteed. For Lew, that’s what made the whole thing so sweet. Stein wanted the immortality; Wasserman wanted the power.”
Once again, the Justice Department’s Antitrust Division sprang into action, threatening an investigation of the Westinghouse-MCA merger on the basis of Westinghouse’s extensive investments in television and radio. Consequently, in April 1969, it was Stein and Wasserman who called the deal off.
A month before MCA terminated the arrangement, Stein, with the support of Taft Schreiber, had made plans to fire Wasserman as the president of MCA. The firing was to have been based upon Universal’s dismal box-office receipts and the handling of the Westinghouse merger. “All Stein had to do was vote his shares at a meeting of the MCA board on March 31, 1969,” said Hollywood columnist James Bacon, who was the first reporter to break the story. “But I got wind of what he was going to do and wrote a column on the Friday before the board meeting.… In my column, I wrote that it was Wasserman’s guiding genius of MCA in its talent agency days that boosted Stein from a mere band-booker to a multi-millionaire tycoon of the entertainment industry.…
“The board meeting was held on Monday as scheduled and a few executives who had hoped to get Wasserman’s job were disappointed: Jules, instead of firing Wasserman, handed him a new long-term contract.”3
Reporter Bob Gottlieb interviewed another top MCA official, who quoted Wasserman before the board meeting as saying, “‘Either I’m in control or not.’ And then, puff, it was gone—the idea that they could really move against him. Lew was in charge, because no matter what Stein and Schreiber thought about their stock or whatever, Lew was the company. It was like waking up from a dream and then saying, ‘Now why did I ever feel that way?’”
According to published reports, in the wake of the attempted coup, MCA executive Berle Adams, who was loyal to Stein and Schreiber and Wasserman’s heir-apparent, was forced out of the company. After a brief housecleaning, Wasserman firmly took charge and began to deal with the corporate debt, beginning with a reshuffling of priorities at Universal. Ned Tanen, a Wasserman protégé who had started out in MCA’s mailroom in 1954 and moved up through MCA’s record company, was moved over to Universal, where he and thirty-two-year-old Daniel Selznick, the son of the legendary producer David O. Selznick, were placed in key executive positions.
As MCA began to get back on track, another merger negotiation emerged, this time with the $2 billion Firestone Tire and Rubber Company of Akron, Ohio, which owned no television or radio stations. The initial driving forces behind Firestone’s attempted takeover of MCA were Schreiber and Leonard Firestone, both of whom had been active on Reagan’s 1966 campaign committee.
“When MCA’s merger with Westinghouse fell through,” Firestone said, “I called Taft Schreiber, a good friend for many years, to say I was sorry. It occurred to me to ask, ‘Why don’t we talk?’ I sent their annual statement to my brother [corporate board chairman Raymond Firestone] with a note saying we ought to take a look at this, and he showed it to the people there.”4
Like Westinghouse, Firestone—which had offered $320 million for MCA—promised the entertainment complex complete autonomy over its movie and television productions and pledged to expand Universal City. Unlike Westinghouse, there was little chance of an antitrust suit being filed to block the merger. But in the end, it was Lew Wasserman who was unenthusiastic at the prospect of his company being taken over by a tire manufacturer. Firmly in command at MCA, Wasserman said no, and the Firestone deal simply collapsed.
In 1968, Ronald Reagan attempted but failed to win the Republican nomination for president of the United States, losing on the first ballot at the GOP convention to Richard Nixon. That same year, the California governor tried, without success, to sell the remaining fifty-four acres of his Malibu Canyon ranch, since Twentieth Century–Fox had decided not to exercise its option to purchase the property. Reagan’s asking price for the property was set at $165,000—or five times the assessed value.
Acting on his behalf, Reagan’s trustees—including William French Smith, Jules Stein, and real estate tycoon William A. Wilson—used the parcel of land as a down payment for a 778-acre ranch in Riverside County in a remote area between Los Angeles and San Diego. Reagan bought this second ranch from a partnership that included the Kaiser Aluminum Corporation. The total purchase price was $346,950. The Reagan trust paid $181,950 in cash and swapped the fifty-four acres for the $165,000 balance. Smith and Schreiber also purchased large tracts of land nearby as well.
However, there was a proviso on Reagan’s sale agreement with Kaiser. If the Kaiser partnership could not sell the fifty-four-acre down payment within one year, then Reagan would be required to buy back the land at the same price, $165,000.
In July 1969, a year after the sale, Kaiser could still not sell the fifty-four acres, so Reagan had to take it back. Needing $165,000, Reagan was lucky enough to have generous friends and was able to rid himself of the property without putting up any of his own money. A mysterious company—the “Fifty-seventh Madison Corporation,” which was chartered in Deleware—bailed Reagan out by slapping down the full $165,000 and buying the fifty-four acres.*
The Fifty-seventh Madison Corporation was created and owned by Jules Stein. Reagan’s fifty-four acres were the company’s only real estate holding outside of New York. The corporation’s property manager, Ross Simpson, told Washington Post reporter Charles Babcock that Stein had “made the purchase because the land was close to property Fox had developed into housing and made a lot of money [on]. He said he was going to invest in that and cut up the land to make houses.” But neither Stein nor Twentieth Century–Fox ever followed through with these plans.5
The month before Stein came to Reagan’s rescue, Stein received the annual Humanitarian Award of
Variety Clubs International, which was held in the Empire Room of the Beverly Hilton. Among the 1,500 guests were Governor Reagan and his wife. Reagan praised Stein as “a truly great humanitarian,” and an “old and valued friend … I know that this man in his own business has carried his principles into the lives of those who were known as his young men.”
As his first term as California governor closed, Reagan had surprised many of his early critics and proved himself to be a competent public office holder. “By any standard,” explained Lou Cannon, Reagan’s principal biographer, “after nearly four years in office, Reagan’s achievements were modest ones. After his initial fling at across-the-board budget cutting, he had become a fairly orthodox governor who had restored funds for higher education and provided money for a community mental health treatment program.… The top appointments in the Reagan administration were faulted by some critics for a pro-business bias, but generally accorded high marks for competence.… [T]here was not the suggestion of taint in any aspect of the administration. Even Reagan’s stern law-and-order rhetoric had been tempered by reality.… All in all, Reagan’s record as governor had been moderate and responsible but undistinguished.”6
His campaign for president in 1968 was viewed as a diversion from his first term because his campaign took him away from pending matters of state. Nevertheless, his closest friends and those whose counsel he trusted had encouraged him to seek the presidency despite his own dilemma as to whether to run or not. In his absence, the governor’s duties were administered by his executive assistant Edwin Meese, who was the architect of the organization of the Reagan administration in Sacramento.
“Reagan took the loyalty of his staff members seriously,” said one observer. “He cultivated their loyalty and used it as a means to hold the governor’s office together. He charmed his staff. Whenever he returned from an extended stay out of town, he habitually went from one end of the office to the other asking [about] everyone’s welfare. He insisted that everyone’s birthdays, especially those of the clerical staff, be celebrated during office hours, and he always attended the party whenever he was in Sacramento. He distributed jelly beans as a means to set people at ease. He passed out acknowledgments of appreciation—his own doodles, pens used to sign bills, autographed pictures—to those who worked with him. He told jokes in cabinet meetings.… He took part in none of the office squabbles. Staff and cabinet members made special efforts to avoid any open show of animosity because everyone knew he did not like such conflict. As a consequence, Reagan’s closest aides were the ones who did the dirty work of disciplining people, of discharging the worst offenders and sanctioning the rest.… He tried to leave work at five and told others to leave when he did.”7
While Reagan prospered, personally and politically, Hollywood crashed. By the beginning of 1970, Universal wasn’t the only studio experiencing hard times. Paramount and Twentieth Century–Fox were financially crippled.* Paramount was nearly sold by its parent company, Gulf & Western, to a nearby cemetery. Twentieth Century–Fox had to hold a public auction of its movie memorabilia, as did economically strapped MGM, which sold for $15,000 the magic shoes Judy Garland wore in The Wizard of Oz.
Universal’s problems, however, were short-lived. In 1970, Ross Hunter produced the star-studded Airport, based on Arthur Hailey’s best-selling novel. Grossing $80 million in domestic sales alone, Airport became one of the biggest money-making films in history and placed Universal—and MCA—back on top. The studio followed up with the critically acclaimed Diary of a Mad Housewife. And in 1971 Universal came back with The Andromeda Strain, Mary, Queen of Scots, and Play Misty for Me.
At Universal-Television, Wasserman promoted his protégé, a thirty-five-year-old Texas attorney named Sidney J. Sheinberg, to be its new president in 1970. Sheinberg had joined MCA in 1959, starting out in its legal department before being discovered by Universal-TV president Jennings Lang and becoming a vice-president of Lang’s fiefdom in 1968. Sheinberg computerized Universal-TV and kept production costs to a minimum, to the delight of MCA. In 1971, Sheinberg helped MCA make television history again, producing the first mini-series, Vanished, a two-part, four-hour, exclusively made-for-television movie about the kidnapping of a top adviser to the president of the United States.
MCA was facing financial losses from its prime-time series, even its successful programs like Marcus Welby, M.D., It Takes a Thief, Adam-12, and Night Gallery. Consequently, MCA began to sell the programs to foreign markets, which dubbed them into French, Spanish, and Japanese, among other languages. These sales helped make up previous losses. More profits came when MCA, after leasing programs to the networks for two prime-time showings, then syndicated them to local stations. A new and exciting age had begun for MCA—which knew the television market was becoming wide open.
In 1970, Reagan ran for a second term as California governor. His Democratic opponent was Jesse Unruh, the speaker of the California State Assembly and a nemesis of the Republican governor since he first took office. Unruh was the quintessential back-room politician. He was an ambitious deal-maker and a ruthless legislator, yet he was well-liked and respected.
As with Pat Brown, Unruh had to face party renegade Sam Yorty in the Democratic primary. While Yorty thrashed away at Unruh, the Assembly speaker tried to keep the party together and defeated Yorty with sixty-four percent of the vote. The strength of Unruh’s victory was such that he was widely considered a formidable candidate to run against the still-popular Reagan.
Unruh raised the issue of Reagan’s property deal with Twentieth Century-Fox—but only gently. He preferred to concentrate his attack on Reagan’s millionaire friends. Unruh charged that they “don’t need a governor because they can buy the governor’s house and probably even the governor.”8
Seeing that Unruh’s offensive was doing some damage to his campaign, Reagan called Unruh “a demagogue,” “a hypocrite,” “dishonest,” and “a man who has no regard for the truth.”9
The Reagan-Unruh battle for the California governorship quickly became a no-holds-barred political free-for-all.
Courted by partisans of both Reagan and Unruh* was Sidney Korshak, who was being viewed as among the most influential people in the state—perhaps even an institution himself. A former top official in the Justice Department explained, “During the Reagan-Brown campaign of 1966, Korshak pretty much stayed out of the fray. He was close to Brown, and he had a lot of friends who were working hard for Reagan. In 1970, things were a little different. He wasn’t as close to Unruh—although they certainly knew each other well—and he already liked how close he was to the center of power at the governor’s mansion in Sacramento. So, Korshak, instead of staying out of it, backed Reagan when he ran for reelection.”
In November, Reagan edged Unruh, carrying fifty-three percent of the vote. The extent of Korshak’s alleged support in Reagan’s victory remains unknown, although Frank Sinatra, a life-long Democrat and a close friend of Korshak, bolted from the party to support Reagan and appear at several political fund-raising events on his behalf.
In Nevada, more than a year before the end of his first term as governor, Paul Laxalt announced that he would not seek reelection. He explained that he was retiring from politics because he wanted to spend more time with his family, particularly his wife, with whom he had had seven children, including four who were adopted.†
Upon leaving the governor’s mansion, Laxalt returned to his Carson City law practice in 1971, with Howard Hughes among his firm’s first clients. Within a matter of days, one of his first tasks was to carry out a high-level favor for the imprisoned Jimmy Hoffa.
On January 26, 1971, Laxalt wrote a “Dear Dick” letter to President Richard Nixon, asking him to release Hoffa, whom he described as “a victim of [Robert] Kennedy’s revenge.” The entire letter read:
Dear President Dick:
The other day I had an extended discussion with Al Dorfman of the Teamsters, with whom I’ve worked closely the past few years.
He described for me in detail the history of Jim Hoffa’s difficulties with the Justice Department.
This discussion, which described in detail the personal vendetta that Bobby Kennedy had against Hoffa, together with other information provided me over the years, leads me to the inevitable conclusion that Jim is a victim of Kennedy’s revenge. This, in turn, convinces me that through vindictive action he has been and continues to be a political prisoner.
Without going into the merits further, since I’m certain you have been fully informed, may I add my support to those who are requesting Executive Intervention so that he can be released in March.
While I don’t know Mr. Hoffa personally, I have had occasion to have a great deal of contact with Mr. Dorfman and the members of the Executive Committee of the Teamsters. As you know, their loans to Nevada resort hotels represent by far the greatest investment in Nevada. Their activities here have been “aboveboard” at all times and they have made a material contribution to our state.
Several months ago I had the members of the board [of the Teamsters] at the Governor’s Mansion for a briefing of our State Gaming heads. The candidness, the spirit of cooperation which they extended, impressed all of us greatly. I cannot believe that the man who organized this group is the criminal type so often depicted by the national press.
The more I move along in life the more impressed by the inaccurate and tragically false images that are created by our national press [sic].
Intervention by the White House would be highly sensitive and would undoubtedly result in severe criticism in certain segments of our country. However, I know that hasn’t deterred you in the past. Action of this type would restore and reinforce a great deal of faith in our federal government. Millions of “little people” would applaud your concern for one of them.
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